Source: Amazon.com
On June 18, 2014 Amazon.com (AMZN 1.66%) will reveal a new device that is likely the long-rumored smartphone. But as Amazon readies to enter the fiercely competitive mobile industry, Reuters reports that the company also made a quieter move to become a middleman in recurring billing -- and stand in competition with eBay (EBAY 1.94%) subsidiary PayPal and Google (GOOG 2.25%) Wallet.
Amazon's move into handling consumer payments further pushes the idea that Amazon wants to serve as an all-encompassing lifestyle brand. But will Amazon burn out trying to become everything to everyone?
Payment plan
Amazon wants to stand as the middleman between customers and start-ups -- or established businesses -- with services that involve recurring billing. This might include subscriptions to digital products such as games or music, or more mundane services such as paying a phone bill. Amazon gets a fee for each transaction and the biller has access to 240 million active users with credit cards on file.
The first confirmed billing participant is Ting, a start-up mobile company that helped Amazon conduct a test run. Ting's product manager told Reuters that customers using Amazon's recurring billing spent about 30% more than average on purchases. And the Amazon name makes customers more willing to hand credit card information over to smaller companies.
Consumers can already set up recurring billing through both eBay's PayPal and Google Wallet, though the latter focuses on digital content. But the Amazon offer could appeal to those whose biller only allows payments through that system -- or shoppers who already use Amazon so much in day-to-day life that using the site as a payment service seems like the next logical step.
And it's that latter reasoning that has driven Amazon to branch out into a staggering number of areas over the past several years.
Amazon's kitchen sink method
The forthcoming unofficial-but-likely smartphone unveiling will push Amazon further into the device business. Kindle Fire tablets have essentially rendered Barnes and Noble's Nook extinct. And the cheaper price tag -- and generous device purchase installment plan -- will help Fires hold their own against Apple's higher-end iPads. And customers will have yet another way to utilize and connect Amazon services.
Here are a few other "daily life" projects Amazon has launched:
- Prime Instant Video: Offers hundreds of thousands of film titles and television series through free streaming for Prime subscribers -- a service that recently had a price jump from $79 to $99 per year. Instant Video competes with the streaming services Netflix and Hulu but recently surpassed both companies with an exclusive, multi-year HBO deal that will make older content available to Amazon subscribers.
- Fire TV: A streaming box for users who wish to cut the cord and break free from monthly cable bills -- or those who simply really love streaming. Fire TV competes with boxes from Roku, Apple, and Google but currently stands in closest competition to Roku. But Roku has the winning hand in the number of third-party apps available ... for now.
- Amazon Local: A daily deal site that competes with Groupon but has close ties with LivingSocial, which counts Amazon as a backer.
- Amazon Fresh: A grocery delivery service with a limited delivery area but enhanced with a new scanner called Dash that makes creating grocery lists a snap.
Foolish final thoughts
Amazon has a lot of balls up in the air but has proven a capable juggler. The company isn't overly dependent on any one service proving successful since the devices, payment plan, and delivery extras all boil down to motivating customers to purchase merchandise.
